“Few plaintiffs in Ford case use coupons as lawyers reap millions”

by Walter Olson on July 17, 2009

Sacramento Bee:

Fewer than 100 consumers out of a million covered in a class-action lawsuit settled in Sacramento Superior Court have redeemed coupons to buy a new Ford, but that hasn’t stopped their lawyers from cashing in on a sweet payday.

So far, the dollar value remitted to plaintiffs in the Ford Explorer rollover class-action lawsuit has added up to about $37,500. Meanwhile, squadrons of lawyers from 13 firms from Sacramento to Woodbridge, N.J., have raked in more than $25 million in attorneys’ fees and expenses.

More: The Recorder. And Ted in comments flags our coverage of the case two years ago.

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Furor over Ford Explorer class action settlement
08.10.09 at 2:24 pm

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1 BP 07.17.09 at 10:49 pm

Some truly astounding logic from a plaintiff’s attorney and the judge in the Bee story.

“While we attempted very strenuously to get cash compensation, … it was clear at the time we settled, given the condition of the U.S. auto industry, that this was the best settlement we could get in that we had grave doubts whether Ford could have survived a $500 million judgment.”

“A half billion dollar judgment might have bankrupted them, so $400 coupons was the best we could do.” Right…

In a July 30 order, DeAlba said the objectors “have failed to raise arguments that defeat the reasonableness of the Settlement as a whole and to give proper weight to the risks, expense and uncertainty” of continuing to press the lawsuit. Even if the plaintiffs had won at trial, Ford in all likelihood would have appealed, which “would delay substantially or eliminate any potential benefits” to the consumers, DeAlba wrote.

“Wieghing in favor of a coupon settlement is the fact that if Ford lost at trial, it would probably appeal the judgement!” No shit?

2 John Beaty 07.17.09 at 10:57 pm

So, how about we make it that the amount the law firms get paid is as a percentage of the actual redemption of the coupons?

3 Bill Poser 07.17.09 at 11:02 pm

I understand why class action lawyers go for these ridiculous settlements, but I don’t understand why the courts approve them. Doesn’t the court have an obligation to prevent the lawyers from selling out their clients, especially in class actions where the attorney-client relationship is so tenuous?

4 Cloudesley Shovell 07.18.09 at 9:18 am

Ford (and other firms) know that class-action coupon redemption rates are well under one percent. The other wonderful thing about coupons is that, if one is used, it must be used to buy a brand new Ford vehicle. It’s a win-win for Ford!

The money paid to the attorneys may be labeled as “attorneys’ fees and expenses” to make everyone feel like they’re all ethical and right and proper, but as far as Ford is concerned, they bought immunity from future lawsuits for a lousy $25 million plus $37,000 of coupons.

Everyone wins here except the people who are supposed to benefit–the client. Is anyone surprised?

5 Ted Frank 07.18.09 at 11:47 am

NB that this is the same lawsuit we criticized in 2007.

6 Peter Malinchoc 07.19.09 at 11:53 am

I would like to see a law requiring that the lawyers be compensated in the same manner as the class members. Here are your 250,000 coupons sirs.

7 Bob Lipton 07.19.09 at 7:32 pm

Everyone has done well? Ford has done well by shelling out twenty six million dollars? How many cars will they have to sell to make that up? Oh, right. They’ll just raise prices.

Bob

8 Griffin3 07.19.09 at 8:26 pm

It’ll indeed make the cars more expensive. How much? Well, 25 million, 2.4 vehicles sold, 68,000 in this class, minus the coupons, carry the one, all the other lawyer’s expenses, settlements, in-house legal work … Hrmm. Comes to $400 per vehicle.

9 Bill Poser 07.20.09 at 12:33 am

Griffin3,

I don’t get your reasoning. If we assume that Ford’s legal costs are approximately the same as those of the plaintiffs, the cost of the settlement to Ford is about $50 million. Dividing by 2.4 million vehicles sold, that comes to about $20 per vehicle. How do you get $400?

10 Jim Collins 07.20.09 at 10:51 am

“The money paid to the attorneys may be labeled as “attorneys’ fees and expenses” to make everyone feel like they’re all ethical and right and proper, but as far as Ford is concerned, they bought immunity from future lawsuits for a lousy $25 million plus $37,000 of coupons.”

Yep. Ford paid out $25,037,000 plus it’s own legal costs to buy protection from future extortion, I mean, lawsuits.

I have got to go to law school. I get that law degree I can run one hell of a protection racket and not have a chance of being arrested.

11 Invid 07.21.09 at 5:49 pm

Jim, the law school route isn’t nearly a profitable as they’ll tell you it is.
But you’ll learn (as I did) interesting ways to convince yourself that what you do is helpful to society and won’t land you in hell.

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